In order to begin budgeting, you have to be aware of you financial position. You need to know every detail of your income and expenditure. Most people know how much they spend on the big things like housing, utilities and food, but by budgeting and being aware of the smaller expenditures, great savings can often be made. Making a list of every penny you spend in a week is a good way to start the process

Discipline

Learning how to budget and knowing the difference between ‘budgeting as routine’ as opposed to ‘budgeting in hard times’ creates a great deal of discipline. This discipline means that people are far less likely to spend their money recklessly in the first place and therefore only in very rare circumstances find themselves in financially hard times.

Spending confidence

Many people who do not budget are often nervous wrecks when it comes to spending their money. They do not know what shape their financial health is in which means there is an inherent lack of confidence in spending; even on the most insignificantly small purchases. Those who do budget know exactly what state their finances are in which means they spend their money with far more confidence. Guilt-free spending throughout the month is extremely liberating.

Emergency fund safety net

Personal budgeting allows people to create an emergency fund which will counter any problems which may arise. Life is full of uncertainties. If someone is retrenched from their job or injured in an accident, having an emergency fund could make a huge difference in how they manage the situation. It creates options and choices rather than problems and restrictions.

Curtails wasteful spending, promotes smart spending

An important part of personal budgeting is keeping a record of how money has been spent and what it has been spent on. Having a good knowledge of spending habits allows people to minimise or eliminate their wasteful spending. It also means people will make smarter choices when they do make purchases.

Spend on bigger and better things

People who do not budget are often blind to the amount of money they spend needlessly. Big purchases or major investments seem like impossibilities. Personal budgeting makes sure that money which is usually spent needlessly is saved. This eventually makes big purchases and investments possible. Personal budgeting doesn’t mean that going on that once in a lifetime holiday is out of the question, it means that the once in a lifetime holiday is more of a possibility than ever before. It means the new family car or even a new home are now closer to becoming a reality.

Discipline, confidence and smarter spending; these are all upshots to personal budgeting. Compared to the restrictions and uncertainties which loom over those who do not budget, it is easy to see how personal budgeting is not a financial tyranny but a financial liberation.

Expats in Asia looking for financial planning advice should get in touch for a free consultation with one of our financial advisory team.

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